Financial regulatory reforms must extend beyond those already agreed, claims chairman of the Financial Services Authority Lord Turner.
While he acknowledges Basel III reforms are set to be beneficial, he stresses that as financial risks continually evolve, regulatory schemes must do the same.
Adding that there is a possibility that regulators will try to pinpoint and fix failures that led to the economic crisis, Lord Turner states that due to the constant flux of financial risks, this would be a fruitless task.
He is set to recommend that equity capital requirements are made higher, while equity surcharges for the banks most crucial to the economy should also be put in place.
This will help to secure the financial system, he says.
"The pre-crisis delusion was that the financial system, subject to the then defined set of rules, had an inherent tendency towards efficient and stable risk dispersion," Lord Turner comments.
Earlier this month, the Adam Smith Institute suggested that economic recovery in the UK could be stilted by the 50p tax.
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